TIDMARGP
30 September 2015
Alpha Returns Group Plc
("Alpha Returns" or "the Company")
Unaudited Interim Results for the Six Months Ended 30 June 2015
Alpha Returns Group Plc today announces its unaudited interim results
for the six months ended 30 June 2015.
Chairman's Statement
Review of the Six Month Period ended 30 June 2015
Alpha Returns is an investment company which operates in the Asia
Pacific (APAC) region and is based in Hong Kong. The Company aims to
create long-term shareholder value through early stage investments in
high-growth Asian economies.
The Company's Investing Policy is set out in full at the end of this
statement and on the Company's website at alpharet.com/rule26.
Financial Review
The unaudited results for the six month period ended 30 June 2015 show a
profit after taxation of GBP54,914 (30 June 2014: GBP122,860 loss). The
loss per share was 0.02p (30 June 2014: 0.09p).
Total revenue was GBP1,728,423 (30 June 2014: GBP85,198).
During the period the Company issued 13,041,352 new ordinary shares to
acquire an additional 10% interest in Riche Bright Group Limited. An
additional 17,394,054 new ordinary shares were issued in part
consideration for a new investment, further details of which are
provided below. At the end of the period under review net assets were
GBP4,624,679 (31 December 2014: GBP4,268,444 and 30 June 2014:
GBP2,562,145).
Review of Operations
On 16 February 2015, the Company exercised its final option to purchase
an additional 10% interest in Riche Bright Group Limited ("Riche
Bright"), bringing the Group's total interest in Riche Bright to 70%.
Riche Bright is a joint-venture investment vehicle of the Company which
owns 100% of M Y Securities Limited ("MYS"). MYS was renamed Riche
Bright Securities Limited ("RB Securities") after the end of the period.
On 24 April 2015, the Company's wholly owned subsidiary, ARGP
Investments Ltd. ("ARGPI"), entered into a conditional sale and purchase
agreement ("SPA") for the acquisition of 50 per cent. of the issued
share capital of Jesoft International Limited, a BVI registered special
purpose vehicle which has been formed to acquire, via a VIE (variable
interest entity) structure, beneficial ownership of Jesoft Computer
Technology Co. Ltd. ("Jesoft PRC"). Jesoft PRC is a PRC corporate IT
solutions provider that specializes in logistics and retail solutions.
At the end of the period, the Company's investments also included a
52.5% interest in Telistar Solutions Pte Ltd ("Telistar"), a Singapore
based IT service solutions provider, and a conditional investment in
OVL/MaxLife, further details of which are provided below. RB Securities
and Telistar are profitable businesses that continue to be operated
independently by their respective management teams.
Post Period Events
After the end of the period, in July 2015, Oriental Ventures Limited
("OVL") completed its acquisition of Shenzhen MaxLife Catering
Management Co., Ltd. ("MaxLife"), a PRC coffee chain business. The
Company has a conditional 30% investment in OVL which remains subject to
a number of preconditions including three consecutive months of
profitable trading. The Company has further extended the long-stop date
to 31 December 2015 for fulfilment of the preconditions attached to the
investment. Deferred consideration, to be satisfied by the issue of
32,142,857 new ordinary shares in Alpha Returns, is payable on
completion.
Board Changes
There were no Board changes during the period under review.
Corporate Governance
The Company operates Audit, AIM Compliance, Nominations and Remuneration
committees. The roles and composition of these committees are kept under
regular review.
Risk Assessment
The Directors consider that the main risk is a loss of some or all value
at one or more of its investee companies. The Executive Directors
maintain a close liaison with the management of each company to limit,
as far as possible, this exposure to risk.
Outlook
Recently we have experienced disruptive market volatility due to
concerns over China's growth prospects and its surprise devaluation of
the Renminbi. The Board continues to closely monitor the market
conditions and its effects on our investments, especially RB Securities.
Nonetheless, your directors remain committed to the creation of
shareholder value and confident that the Company's investments are well
placed to deliver good performance over the longer-term.
Tony Drury
Chairman
30 September 2015
A copy of this interim report will shortly be available on the Company's
website at alpharet.com/rule26.
For further information please call:
Alpha Returns Group Plc
Christopher Neo, Executive Director 0203 286 6388
ZAI Corporate Finance
Peter Trevelyan- Clark / Ivy Wang 0207 060 2220
Peterhouse Corporate Finance (Broker)
Duncan Vasey/Lucy Williams 0207 220 9797
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2015
Unaudited Unaudited Audited
6 Months
6 Months to to 30 12 months
30 June June to Dec
2015 2014 2014
Note GBP GBP GBP
Continuing operations
Revenue 1,728,423 - 1,219,808
Cost of sales (754,136) - (361,209)
Gross profit 974,287 - 858,399
Administration costs (1,010,609) (207,442) (996,243)
Share based payments (67,000) - (127,758)
Other income 201,224 85,185 45,876
Operating profit/(loss) 97,902 (122,257) (219,526)
Loss on disposal of investments - - (371,713)
Profit/(loss) before financing 97,902 (122,257) (591,239)
Finance cost - (616) -
Finance income 5 13 40
Investment income 226 - 2,680
Gain on foreign exchange 1,895 - 58,915
Profit/(loss) on continuing operations before taxation 100,028 (122,860) (157,891)
Taxation (45,114) - (1,391)
Profit/(loss) on continuing operations after taxation 54,914 (122,860) (159,282)
Gain on translation of foreign subsidiaries ( 61,379) - 87,870
Profit/(loss) after taxation and total comprehensive
income/(expense) (6,465) (122,860) (71,412)
Attributable to:
Equity holders of the company (94,536) (122,860) (265,200)
Non- controlling interests 88,071 - 105,918
Basic and diluted loss per share
- Basic and diluted - continuing operations 3 (0.02p) (0.09p) (0.05p)
- Total basic and diluted loss per share
(0.02p) (0.09p) (0.05p)
Consolidated Statement of Financial Position
As at 30 June 2015
Unaudited Unaudited Audited
30 June 30 June 31 December
2015 2014 2014
GBP GBP GBP
Assets
Non-Current Assets
Property, plant and equipment 131,103 - 104,815
Intangible assets 1,317,457 - 1,317,857
Investments 581,586 1,768,680 583,720
Investments in associate 295,699 - -
Deferred income tax assets - - 19,290
2,325,845 1,768,680 2,025,682
Current Assets
Trade and other receivables 1,937,290 36,246 1,932,752
Financial assets available for
sale 111,379
Cash and cash equivalents 1,280,138 1,295,313 1,848,183
3,328,807 1,331,558 3,780,935
Total Assets 5,654,652 3,100,238 5,806,617
Liabilities
Trade and other payables 1,029,973 128,257 1,538,173
Borrowings - 409,836 -
1,029,013 538,093 1,538,173
Total Liabilities 1,029,973 538,093 1,538,173
Net Assets 4,624,679 2,562,145 4,268,444
Equity
Share capital 1,351,624 1,346,421 1,348,580
Share premium 7,069,224 6,061,328 6,525,522
Share option reserve 194,758 - 127,758
Foreign currency translation
reserve 33,896 - 87,870
Profit and loss account (4,960,452) (4,845,604) (4,987,944)
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Attributable to equity
shareholders of the company 3,689,050 2,562,145 3,101,786
Non-controlling interests 935,629 - 1,166,658
Total equity 4,624,679 2,562,145 4,268,444
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2015
Loan
note Share Foreign Profit Non-
Shares equity option currency and con-
Share Share to be re- re- re- loss Total trolling
capital premium issued serve serve serve account equity interest Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance
at
1 Jan
2014 1,322,843 4,255,147 - - - - (4,722,744) 865,246 - 865,246
Shares
issued
in year 13,578 1,806,182 - - - - - 1,819,760 - 1,819,760
Loss for
the
6
months
to
30 June
2014 - - - - - - (122,860) (122,860) - (122,860)
-
Balance
at
30 June
2014 1,346,421 6,061,329 - - - - (4,845,604) 2,562,145 - 2,562,145
Balance
at
1 Jan
2014 1,322,843 4,255,147 - - - - (4,722,744) 865,246 - 865,246
Shares
issued
in year 15,737 2,270,375 - - - - - 2,286,112 - 2,286,112
Share
based
payment
charge - - - - 127,758 - - 127,758 - 127,758
Foreign
Currency
reserve - - - - - 87,870 - 87,870 - 87,870
Acqui-
sitions
during
the year - - - - - - - - 1,060,740 1,060,740
Loss
for
the year - - - - - - (265,200) (265,200) 105,918 (159,282)
Balance
at
31 Dec
2014 1,348,580 6,525,522 - - 127,758 87,870 (4,987,944) 3,101,786 1,166,658 4,268,444
Shares
issued
in the
period 3,044 543,702 - - - - - 546,746 - 546,746
Share
based
payment
charge - - - - 67,000 - - 67,000 - 67,000
Foreign
Currency
reserve - - - - - (53,974) - (53,974) (7,405) (61,379)
Acqui-
sitions
during
the year - - - - - - - 68,054 (319,100) (251,046)
Profit
for the
period
and total
com-
prehen-
sive
income - - - - - - (40,562) (40,562) 95,476 54,914
Balance
at
30 June
2015 1,351,624 7,069,224 - - 194,758 33,896 (4,960,452) 3,689,050 935,629 4,624,679
Consolidated Statement of Cash Flow
For the six months ended 30 June 2015
Unaudited Unaudited Audited
6 Months 12 months
to June 6 Months to to December
2015 June 2014 2014
GBP GBP GBP
Cash flows from operating activities
Loss after taxation 54,914 (122,860) (159,282)
Adjustments for:
Depreciation and amortisation 9,489 - 17,474
Profit on sale of property, plant and equipment - - (430)
Share based payments 67,000 - 127,758
Loss on disposal of investment - - 375,207
Decrease in trade and other receivables (77,054) (13,898) (238,014)
(Decrease)/Increase in trade and other payables (482,364) 51,461 249,881
Foreign exchange differences 5,423 - 6,337
Taxation 45,114 - 1,391
Income tax paid (24,902) - (4,525)
Net cash used in operating activities (402,380) (85,297) (624,498)
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired - - (651,121)
Purchase of property, plant and equipment (38,010) - (86,251)
Disposal of property, plant and equipment - - 900
Purchase of investments - - (479,097)
Purchase of financial assets (114,907) (1,371,281) -
Net cash used in investing activities (152,917) (1,371,281) (1,215,570)
Cash flows from financing activities
Net proceeds from issue of share capital 847 1,819,759 2,959,853
Proceeds from borrowings - 359,836 -
Net cash generated from financing activities 847 2,179,595 2,959,853
Net (decrease)/increase in cash and cash equivalents (554,450) 723,018 1,119,785
Cash and cash equivalents at beginning of period 1,848,183 572,296 572,296
Effect of foreign exchange rate changes on cash and
cash equivalents (13,595) - 156,102
Cash and cash equivalents at end of period 1,280,138 1,295,313 1,848,183
NOTES TO THE FINANCIAL INFORMATION
1. General information
The financial information set out in this consolidated interim report
for the six months ended 30 June 2015 and the comparative figures for
the six months ended 30 June 2014 are unaudited. The financial
information for the six months ended 30 June 2015 does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006.
The Group's statutory financial statements for the year ended 31
December 2014, prepared under International Financial Reporting
Standards (IFRS), received an unqualified audit report. The report did
however contain an emphasis of matter paragraph on going concern, but
did not contain statements under sections 498(2) or section 498(3) of
the Companies Act 2006 and have been filed with the Registrar of
Companies.
1. Basis of Preparation
The 30 June 2015 consolidated interim financial statements of Alpha
Returns Group Plc are for the six months ended 30 June 2015. They do not
include all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated
financial statements of the Group prepared under IFRS for the year ended
31 December 2014.
The comparative figures for the six months ended 30 June 2014 have been
extracted from the accounting records of the Group and were prepared on
a consistent basis with the results presented for the year ended 31
December 2014 and have been neither reviewed nor audited by the Group's
auditors.
The accounting policies applied are consistent with those of the
financial statements for the year ended 31 December 2014, as described
in those financial statements, and as expected to be adopted in the
financial statements for the year ending 31 December 2015.
1. Earnings per share
The basic loss per share is calculated by dividing the loss attributable
to equity shareholders by the weighted average number of shares in
issue.
The loss attributable to equity shareholders and weighted average number
of ordinary shares for the purposes of calculating diluted earnings per
ordinary share are identical to those used for basic earnings per
ordinary share. This is because the exercise of share options would have
the effect of reducing the loss per ordinary share and is therefore
anti-dilutive.
Earnings per share Unaudited Unaudited Audited
12 months
6 Months to 6 Months to to December
June 2015 June 2014 2014
Net profit/(loss) for the period attributable to equity
owners of the parent (94,536) (122,860) (265,200)
Weighted average number of shares in issue 649,515,679 584,362,232 585,326,862
Basic and diluted earnings per share (0.02p) (0.09p) (0.05p)
4. Investments held at fair value through profit and loss
Unaudited Unaudited Audited
6 Months to 6 Months to June 12 months to
June 2015 2014 December 2014
Fair value at 1
January 2015 583,720 397,399 397,399
Acquisitions 111,379 1,371,281 186,321
Net gain on
disposal of
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